The US unemployment rate exceeded expectations on Friday dropping below 5% for the first time since February 2008. January’s job growth, however, came about 40,000 jobs under what economists expected. Following a strong finish to 2015, economists surveyed by Reuters expected the January jobs number to come in at 190,000. In the last quarter of 2015, job numbers increased by an average 284,000 a month. Overall, the US economy added 2.65m jobs in 2015.

While the number was below expectations one of the brighter spots in the report was a rise in US hourly earnings, which went up by 0.5%. In January, average hourly earnings went up by 12 cents to $25.39. Over the year, average hourly earnings have risen by 2.5%. The US Department of Labor has often referred to US wages as the “unfinished business of this recovery”.

December’s better-than-expected job growth was revised to 262,00, down from 292,000. November’s jobs growth was revised up to 280,000, from 252,000. Overall, the US economy added just 2,000 fewer jobs in those two months than previously reported.

“Be wary of payrolls for January,” said Jim O’Sullivan, chief US economist at High Frequency Economics, a day before the January job numbers were announced. “We say that every year, but it seems especially apropos this time given the anxiety in the market.” O’Sullivan had also expected the US economy to add 190,000.

“A weaker-than-expected increase would likely be viewed by many market participants as confirmation that the economy is suddenly losing momentum,” he said.

There had been some indications that job growth had slowed down in the first month of 2016. Figures from payroll company ADP showed that private sector companies added 205,000 jobs in January, down from 267,000 in December.

The number of Americans filing for unemployment benefits exceeded expectations, at 285,000. GDP figures reported last Friday revealed that the US economy had grown at just 0.7% in the last quarter of 2015.

It is likely that the slowdown will continue, as employers announce job cuts. Earlier this week, Yahoo announced that it was cutting its workforce by 15%. BP will cut 4,000 jobs from its exploration arm and 3,000 jobs from “downstream” refining, many of which are in Houston, Texas.

On Thursday, Van Beurden said 7,500 of those jobs were gone and 2,800 were still to be cut. Despite an 87% drop in profits, the company does not expect additional cuts.

According to Challenger, Gray & Christmas, a global outplacement company that keeps track of layoffs, employers in the US planned to cut 75,114 jobs in January, up from December’s 15-year low of 23,622. The energy sector alone planned to cut 20,246 jobs, while retailers planned to eliminate 22,246.

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December 19, 2015

In mid-January, Walmart announced that it was closing 154 stores in the US, a move expected to affect as many as 10,000 employees. Many of the stores were closed by the end of the month.

“However confident Janet Yellen and her Fed colleagues were when raising interest rates in December, the US data released in January must be giving them food for thought – and today’s poor non-farm payroll figures are no different,” said Dennis de Jong, managing director at UFX. “Adding less than 200,000 jobs for the first time since October, coupled with lower than expected GDP and productivity figures, has taken some of the shine off of the previously buoyant US economy.”

And while Yellen might not be worried too much just yet, said de Jong, “many observers will surely be adopting a wait-and-see approach”.